Sanchez v CA, 69 SCRA 327

Topic: A mere money claim cannot be registered as an adverse claim

Facts:

Respondent Rural Bank of Ormoc City, Inc. had executed certain affidavits of adverse
claim to certain registered sugar lands in Tacloban and Ormoc Cities alleged by petitioner to
belong to him either as co-owner and/or as redemptioner. The said lands were the subject of
mortgage loans obtained from respondent bank which had been fully paid and discharged either
by payment or redemption after extra-judicial foreclosure.

Claiming that it still had certain unsecured money claims against the registered owners
(i.e. loans extended by it to seven other borrowers covered by promissory notes wherein
petitioner had signed as co-maker as well as other unsecured loans wherein the other
registered had likewise signed as co-makers of the promissory notes), respondent bank sought
to have its adverse claim annotated on the certificates of title as "a claim or right of (the) bank to
the properties of the persons ... having a contractual obligation with the bank" and refused to
surrender the certificates of title to petitioner without such annotation first having been made so
that it "will not be at the losing end and to protect the rights of the bank."

Issue:

Whether a mere money claim may be properly registered as an adverse claim on a

Torrens Certificate of Title within the purview of the Land Registration Act

Held:

No. Section 110 of the Land Registration Act (Act 496) manifestly provides that a person
or entity who wishes to register an adverse claim in registered land must-claim a "part or interest
in (the) registered land adverse to the registered owner. Thus, purely money claims such as
those of respondent bank by virtue of unsecured personal loans granted by it on promissory
notes executed in its favor signed by the borrowers and co-signed by petitioner as co-maker are
not registrable as adverse claims against the petitioner's registered lands.

If respondent bank wanted the additional security of petitioner's real properties besides
his personal signature assuming liability for the payment of the personal loans, then it should
not have extended the loans without requiring furthermore the execution of a covering real
estate mortgage.